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Existing Home Sales Surpass Last Year’s Pace

There are a lower-than-normal number of previously owned homes available in today’s market, but that hasn’t stopped home buyers. In fact, according to the National Association of Realtors, sales of existing homes between January and April are 20 percent higher than they were during the same period last year. That’s despite the fact that April sales fell 2.7 percent from the month before. Lawrence Yun, NAR’s chief economist, says demand is strong. “Despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20 percent compared to 2020,” Yun said. “The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year.” More homeowners are expected to list their homes for sale as COVID vaccinations are administered and Americans feel more comfortable showing their homes. As that happens, home-price increases and buyer competition are expected to moderate. (source)

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Forecast Sees Improvement Ahead For Housing Market

Each month, Fannie Mae’s Economic and Strategic Research Group releases a forecast for the economy and housing market. According to their most recent release, the group sees improvement ahead. In fact, their forecast calls for home sales to increase 6.3 percent this year and new home construction to rise almost 25 percent higher than the year before. But despite the optimistic numbers, there are still challenges facing the market. Among the biggest is the lack of existing homes available for sale. Fewer homeowners are listing their homes and the pace of new home construction, while greatly improved, is being slowed by supply constraints and a shortage of available lots. That means, inventory issues will likely continue for the foreseeable future. Fortunately, Doug Duncan, Fannie Mae’s senior vice president and chief economist, says conditions haven’t affected mortgage rates. “This has yet to significantly affect mortgage rates, except to the extent that the rise in the 10-year Treasury since the beginning of the year contains an increased expected inflation component and has prevented mortgage rates from retreating further from their temporary recent peak,” Duncan said. (source)

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Mortgage Demand Rises Week-Over-Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage loan applications rose 1.2 percent last week from the week before. But while the improvement is a welcome sign, it wasn’t due to an increasing number of Americans buying homes. Instead, the gains were mostly found in the refinance index, which rose 4 percent from one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says purchase-application demand is still suffering due to a lack of available homes for sale. “A decline in purchase applications was seen for both conventional and government loans,” Kan said. “There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply.” Also in the report, average mortgage rates were up from the week before, with increases seen for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the FHA, and 15-year fixed-rate loans. Still, rates remain below where they were in late March and early April. (source)

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Competition Intensifies For Spring’s Best Homes

By now, everybody knows the housing market’s hot. They’re probably also familiar with the factors that have kept it buzzing. Low mortgage rates and the increasing number of Americans working remotely are just a couple of the now well-known drivers of recent buyer demand. But just how competitive is the spring market? Well, according to one recent analysis, 72 percent of the homes sold in April faced competition. In other words, nearly three-quarters of the homes sold during the month had more than one interested buyer. And that’s up almost 4.5 percent from the month before. But it shouldn’t be a surprise that the real-estate market isn’t cooling down. After all, spring and summer are typically the busiest months for home sales. It’s also when homeowners who want to sell – rather than need to – put their homes on the market. That means, the homes listed now are more likely to have been upgraded and prepped for sale, which raises the competition for them even higher. (source)

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Conditions Help Keep Builder Confidence High

Because home builders have a unique perspective on the housing market, the National Association of Home Builders conducts a monthly survey to gauge how confident they are in the market for newly built homes. Their responses are scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In May, the NAHB’s Housing Market Index held steady at 83, unchanged from the month before. Chuck Fowke, NAHB’s chairman, says there are a few factors that have builders feeling optimistic about the market. “Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates, and a growing demographic of prospective home buyers,” Fowke said. “However, first-time and first-generation home buyers are particularly at risk for losing a purchase due to cost hikes associated with increasingly scarce material availability.” It’s true. Construction costs – including the price of lumber – have spiked over the past year. That means, home buyers interested in buying a new home should expect rising prices, at least, through the end of 2021. (source)

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Neighbors Have Become More Neighborly

In times of crises, people tend to come together. That’s certainly been true over the past year. The coronavirus pandemic meant we all had to look out for one another a little bit more than usual, and we did. Especially, closer to home. In fact, according to one recent analysis, the pandemic led to an immediate uptick in neighborhood outreach. We started relying more on the people in our own communities for everything from picking up prescriptions to walking dogs and letting each other know where supplies that had suddenly become scarce were still in stock. The increase in neighborhood engagement wasn’t just in certain locations or among certain demographics, either. It was widespread, from urban centers to rural areas and among the young and old. It was so widespread that 75 percent of surveyed neighbors said they had recently been the recipient of a random act of kindness. In short, we’ve all become a bit more neighborly in the past year – and that’s good news, because good neighbors make for safer, happier neighborhoods. (source)

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Homeowners Continue To See Equity Gains

When you own a home and its value increases, you build equity. And when the amount of equity you’ve built is more than double what you owe on your mortgage, you’re considered equity rich – at least, according to ATTOM Data Solutions’ 2021 U.S. Home Equity & Underwater Report. The report, which looks at the number of equity-rich properties across the country, found that almost one in three homes qualified during the first quarter. In fact, 31.9 percent of the 55.8 million mortgaged homes included in the analysis were equity-rich. That’s up from 30.2 at the end of last year and nearly 5.5 percent higher than last year at the same time. Todd Teta, ATTOM’s chief product officer, says it’s a great time to be a homeowner. “It continues to be a great time to be a homeowner most everywhere in the country,” Teta said. “The ongoing price spikes we’re seeing help to cut down the number of seriously underwater properties and boost the level of equity-rich properties.” (source)

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Rates Fall To Lowest Level In Months

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from the week before. Rates were down across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says rates are now lower than they’ve been in months. “Mortgage rates fell last week to the lowest levels since February, tracking the dip in Treasury yields,” Kan said. “The decline in rates helped the refinance index reach its highest level in eight weeks … The first week of May was also strong for the purchase market. Applications were up 13 percent from a year ago, which was around the time the housing market awakened from the pandemic-induced stall in activity.” Overall, demand for mortgage applications was up 2.1 percent week-over-week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

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Mortgage Credit Availability Continues To Improve

In order to be approved for a mortgage, borrowers have to meet certain standards. How well they meet those standards not only determines whether they’re approved to borrow but also the terms of the loan they receive, should they be approved. Lending standards aren’t fixed, though. Which means, there are times when they’re stricter and times when they loosen. That’s why the Mortgage Bankers Association tracks mortgage credit availability each month – to help potential borrowers know what to expect. In April, according to their most recent report, lending standards loosened from the month before, making credit more available. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says credit availability has improved as the housing market and economy have made gains. “The uptick in credit supply comes as the housing market and economy continue to strengthen,” Kan said. “One trend that has developed in recent months is the rising demand for ARMs, driven by higher rates for fixed mortgages and faster home-price appreciation.” Still, despite the improvement, credit availability hasn’t yet returned to where it was before the pandemic’s onset last March. (source)

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The Single Best Strategy For Winning A Bidding War

In a competitive market, home buyers have to make their offers as attractive as possible. Good homes are in high demand and homeowners will, most likely, have more than one offer to choose from. That means, you have to make a strong case, if you hope to have yours chosen. So what’s the most effective strategy for winning a bidding war in a hot market? Well, according to one recent analysis, the single most effective strategy is an all-cash offer. In fact, 41 percent of surveyed real-estate agents named it as the best route for buyers in a bidding war. But all-cash offers aren’t possible for most buyers, which is why a higher down payment, additional earnest money, escalation clauses, and submitting before the review date were also popular strategies with today’s home shoppers. There are, of course, other ways to make your offer stand out, such as waiving the inspection or financing. However, those come with significant risks, since they remove protections put in place to save buyers from costly consequences. (source)